Courses which entail the students to seek employment or to undertake self-employment are Vocational Courses and hence not liable for service tax

The appellant herein is conducting fifteen courses in their educational institutes.

Issue :

Revenue entertained a belief that the courses conducted by the appellant would be liable for service tax under the category of “commercial training or coaching centres”.

Assessee Claim :-

Appellant contested the show-cause notice before the adjudicating authority on the ground that they are charitable institution and the courses conducted by them are of vocational in nature hence eligible for the benefit of Notification No.9/2003- ST as amended.

“vocational training institutes” would cover the courses conducted by the appellant as these courses entail the students to seek employment or to undertake self-employment.

Held

As per Notification 9/2003-ST exemption is granted to those services provided by Commercial Training or Coaching Institutes if they impart skills to enable the trainee to seek employment or undertake self-employment.

2. The relevant facts that arise for consideration are during the period 01.07.2003 to 31.03.2006 it was aileged that the appellant herein is conducting fifteen courses in their educational institutes. Revenue entertained a belief that the courses conducted by the appellant would be liable for service tax under the category of “commercial training or coaching centres”. Accordingly, show-cause notice was issued demanding service tax liability from the appellant by invoking extended period. Appellant contested the show-cause notice before the adjudicating authority on the ground that they are charitable institution and the courses conducted by them are of vocational in nature hence eligible for the benefit of Notification No.9/2003- ST as amended. They have also contested the show cause-notice on limitation as there was a consistent view held by the Tribunal that service tax is not payable by “commercial training or coaching centres” if they are not “commercial organization” and since they were charitable institution, they are not liable to pay service tax. The adjudicating authority after following due process of law, confirmed the service tax on the amounts received as fees for conducting courses on (i) Institute of Mass Communication, (ii) International Business Management, (iii) Telecom Management, (iv) Information Technology, (v) Management Studies, (vi) Geo-informatics and (vii) Operational Management while setting aside the demands raised for various other courses. The adjudicating authority also imposed penalty besides demanding interest on the amount of the service tax confirmed by him.

3. Learned C.A. would submit that the issue is now squarely covered by the judgment of the Tribunal in as much, the benefit of Notification 9/2003 as to vocational training. He would rely upon the judgment of the Hon’ble High Court of Delhi in the case of CST v. Ashu Exports (P.) Ltd. [2014] 45 GST 20 the judgment of the Hon’ble High Court of Uttarakhand in the case of CC&CE v. Doon Institute if Information & Technology (P.) Ltd. [2014] 45 GST 668 and also on the decision of the Tribunal in the case of Pasha Educational Training Institute v.CCE [2009] 22 STT 431 (Bang. – CESTAT). It is his submission that the benefit of Notification 9/2003 is wrongly denied as “vocational training institutes” would cover the courses conducted by the appellant as these courses entail the students to seek employment or to undertake self-employment. He would also submit that the demands are hit by limitation as the show-cause notice is issued by invoking extended period of limitation and the appellant had entertained a belief that they are not a commercial organization but a charitable institution.

4. Learned D.R. on the other hand would submit the stand of the applicant is totally incorrect as there is nothing on record to show that after completing the training in the subject the students would get employment or self-employed. He would submit that the definition of vocation training as read by the learned C.A. had undergone a change by Notification No.3/2010-ST, dated 27.7.2010 which mandated that “vocational training” should be conducted by an Industrial Training Institute or an Industrial Training Centre affiliated to the National Council for Vocational Training offering courses in designated trades as notified under the Apprentices Act, 1961. He would submit that this Tribunal had gone into the details as to what is vocational training, meaning of vocational training by Vocational Training Institutes in the case ofSadhana Educational & People Dev Services Ltd. v. CCE [2014] 47 GST 79 (Mum. – CESTAT) andProf. Ulhas Vasant Bapat v. CCE [2014] 46 GST 750 (Mum. – CESTAT) and held that vocational training means it should be in respect of trades which are covered under the Apprentices Act, 1961.

5. We have considered the submissions made at length by both sides and perused the records.

6. On perusal of the records, we find that the issue needs to be decided in this case is the taxability of the services under the category of “commercial training or coaching centres” in respect of various courses conducted by the appellant as para 2 above. We find that there is no dispute as to the fact that the appellant is conducting the courses as mentioned hereinabove in paragraph No.2 and also on successful completion of the courses, issues certificates to the students. It is also undisputed that the certificates which are issued by the appellant on completion of the courses are produced for the purposes of employment or self-employment. On such a background it needs to be considered whether the appellant is entitled for exemption as claimed by them under Notification 9/2003-ST as amended. We reproduce the relevant portion of the said Notification:-

‘(i) “vocational training institute” means a commercial training or coaching centre which provides vocational coaching or training that impart skills to enable the trainee to seek employment or undertake self-employment, directly after such training or coaching;’

6.1 It can be seen from the above reproduced portion of notification that exemption is granted to those services provided by Commercial Training or Coaching Institutes if they impart skills to enable the trainee to seek employment or undertake self-employment.

6.2 The Hon’ble High Court of Uttarakhand in the case of Doon Institute of Information & Technology (P.) Ltd. (supra) was considering the very same notification as amended by Notification 24/2004-ST, the Lordship has held as under:—

‘3. On 10th September, 2004, when the original Notification 24/2004-ST was notified, thereby, vocational training institute recreational training institutes were accorded exemption, but not the computer training institutes. Computer training institutes, therefore not be covered by the exemption accorded by the Notification dt. 10 September, 2004. 10 September, 2004 Notification is an independent Notification. The same did not refer to any earlier Notification. Therefore, in the matter of interpreting the Notification dt. 10th September, 14, one has to read only the words used in that Notification not borrow any words from any other Notification. By this Notification, there is no dispute that exemption was accorded to vocational training institutes. Vocational training institutes had been defined by the Notification. It said that a vocational training institute shall mean a commercial training of coaching centre, which provides vocational training or coaching that imparts skill to enable the trainee to seek employment or undertake self- employment directly after such training or coaching. In absence of statutory definition, we have to proceed on the basis of the ordinary meaning of the word “vocational: which means “relating to an occupation of employment; directed at a particular occupation and its skills”. It cannot be questioned that skill pertaining to computer software and hardware is required to be acquired and, at the same time, it cannot be disputed that once such a skill is acquired, it throws open the door of an occupation relating to computer software and hardware, which entails employment or self-employment. Inasmuch as nothing was mentioned in the Notification, dated 10th September, 2004 as regards computer training institutes, it cannot be said that the 10th September, 2004 Notification made any distinction in-between a vocational training institute and a computer training institute as was made on 20th June, 2003. In that background, we find that the Tribunal cannot be said to have erred by holding out that the respondent assessee was a vocational training institute, but we make it clear that it was so in terms of the Notification, dated 10th September, 2004 until 16th June, 2005, i.e. when the concept of computer training institute introduced for time in the Notification, dt. 10th September, 2004. Having had said so, we find scope of interference. The appeal fails and the same is dismissed.’

6.3 In yet another case of Ashu Exports Promoters (P.) Ltd. v. CST [2012] 34 STT 47 (New Delhi – CESTAT) the Hon’ble High Court of Delhi was considering, specifically the Notification 09/2003-ST, and was also considering the explanation inserted by Notification 3/2010 (on which reliance placed by the learned D.R,). After reproducing the said notification the Lordships held as under:—

‘8. The appellants rely on Eleventh Five Year Plan (2007-2012) Document Volume 1 to argue that the concept that vocational skill will cover only skill requiring low levels of education is not correct. They have produced copy of Chapter 5 dealing with “Skill development and Training” Paras 5.4 and 5.39 are particularly relevant. These are reproduced below:

“5.4 In India, skill acquisition takes place through two basic structural streams – a small formal one and a large informal one. The formal structure includes (i) higher technical education imparted through professional colleges (ii) vocational education in schools at the post-secondary stage (iii) technical training in specialized institutions and (iv) apprenticeship training. A number of agencies impart vocational education/training at various levels. Higher professional and technical education, primarily in the areas of agriculture, education, engineering and technology, and medicine is imparted through various professional institutions.”

9. The appellants also rely on the Implementation Manual for Skill Development Initiative Scheme (SDIS) published by the Directorate General of Employment & Training, GOI forwarded to various state government authorities under cover of Letter DGET-2/2/2007-MES/IS (Part-I), dated 4.10.2010. The appellants have submitted a tabulation showing the skills specified in the manual mapped against the course contents of their courses.

10. The argument of the appellant is that the GOI has been using the word “vocational training” to cover the type of training provided by the appellant.

11. The appellants also rely on the decision of Wigan & Leigh College (India) Ltd. v. Joint Commissioner (ST), Hyderabad – 2007 (8) STR 475 (Tri. – Bang.). In the said case, the institute was providing training in Business Management and Fashion Technology, Advertising, Graphic Design, Media Studies. The Tribunal decided that such training was vocational training.’

It can be seen from the reproduced ratio of The Lordships, the issue is now squarely covered in favour of the appellant.

6.4 As regards the reliance placed by learned D.R. on the decision of the Tribunal, we find that the Hon’ble High Court of Delhi has specifically considered the judgment of Sadhana Educational & People Dev. Services Ltd.‘s case (supra) and further it has to be noted that the judgment of the High Court are binding on the Tribunal and needs to be followed in preference to Tribunal’s order.

6.5 The Revenue’s case by relying upon the judgment of Tribunal will not carry the case any further in view of the judgments of the Hon’ble High Courts of Uttarakhand and Delhi.

6.6 Since we are disposing the appeal on merits, we are not recording any findings on various other submissions made by both sides.

6.7 In view of the facts and circumstances of the case and authoritative judicial pronouncements, we hold that the impugned order to that extent it is challenged before us is not sustainable and liable to be set aside and we do so.

7. The appeals are allowed to that extent they contest the impugned order.

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